Bill Eases Export Rules on Commercial Satellites

Five years ago, the idea of easing export controls on commercial satellites was politically unthinkable. That mindset has changed during the last half decade, as the idea that those restrictions are harming both national security and the U.S. industry base has gradually gained traction.

And during a year in which the U.S. Congress barely passed even routine bills, lawmakers came together to shed long-standing restrictions on the export of commercial satellites.

“This evolution on satellite export regulations means that major U.S. satellite manufacturers will be more able to collaborate with international partners and finally places U.S. component makers on a more even footing in the global marketplace,” says Patricia Cooper, president of the Satellite Industries Association.

Lawmakers signed off on a fiscal 2013 defense authorization bill that allows the president to remove commercial satellites and components from the U.S. Munitions List (USML) and allows him to decide which satellite technologies are the most important to protect. The bill still restricts the export and transfer of technology to China, Cuba, Iran, North Korea, Sudan and Syria.

Satellites and related items were placed under regulations in 1999, because of fears about dual-use satellite technology helping China develop its own launch and missile technologies. At that time, a congressional commission found that satellite companies knowingly transferred technical information to China. The debate began to shift very gradually. In 2008, a report by the Center for Strategic and International Studies laid out the unintended consequences of the restrictions. It described how important it was to defense and intelligence efforts for the U.S. to retain its technical edge, and the report drew a strong link between the industry's competitiveness and the nation's security. Afterward, industry sources say, the conversation began to shift in favor of lifting the regulations.

By 2010, Congress formally asked for an assessment of the national security risks of removing satellites and components from the USML. The study, known as the 1248 report, was finally delivered last April.

Remy Nathan, vice president of international affairs for the Aerospace Industries Association (AIA), calls it “the right report at the right time.” It made the case that restrictions could be lifted, that lifting them was necessary to preserve national security and provided a Congress with enough detail to direct legislative change.

“It answered the uncertainty about whether it was time to make such a big step,” Nathan says.

Along the way, AIA was issuing reports stressing the negative impact of restrictions to industry. The U.S.'s share of satellite manufacturing dropped from 65% to as low as 30% since Congress imposed export restrictions. That added up to a $21 billion loss in revenue from 1999 to 2009 and 9,000 jobs, AIA estimates.

In 2011, Rep. Howard Berman (Calif.), the top Democrat on the House Foreign Affairs Committee, introduced the bill with a long list of co-sponsors. It passed in the House but stalled in the Senate. This year, the bill was included in a package of amendments to the defense authorization bill with two key co-sponsors—Rep. Buck McKeon (R-Calif.) and Rep. Adam Smith (D-Wash.), who lead the House Armed Services Committee.

“This agreement will help restore America's global competitiveness in high-tech satellite technology, while also protecting vital U.S. national security interests,” says Berman, who lost re-election in November. “Treating commercial satellites and components as if they were lethal weapons, regardless of whether they're going to friend or foe, has gravely harmed U.S. space manufacturers. U.S. national security depends upon these manufacturers for our own defense needs; if they can't compete in the international marketplace due to onerous restrictions, they can't innovate and cannot survive.”

In addition to easing the restrictions on commercial satellite exports, lawmakers also handed the Obama administration a big win over its larger export control reform effort. The final version of the bill nixed a provision dealing with how the administration notifies Congress of which goods are moving from the State Department's U.S. Munitions List to lists managed by the Commerce Department.

Despite the key support for easing the restrictions on commercial satellites, lawmakers remain concerned about the export of sensitive technology to China. That includes Rep. Norm Dicks (D-Wash.), the top Democrat on the House Appropriations Committee, who retires at the end of this term and was on the select committee that recommended restrictions on satellite exports many years ago. “It's one thing to be able to export them, we've just got to be sure who we're exporting them to,” Dicks says. “You have got to have some control.”

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